Highly Anticipated Hogs and Pigs Report Shows Drop In Inventory

This is one of the most highly anticipated Hogs and Pigs Reports that we’ve had, said Jim Robb, director of the Livestock Marketing Information Center.

Certainly as reports of PEDv continued from last fall into 2014 intersected with moderated grain prices, many eyes were on the hog sector.

Today, USDA reported U.S. inventory of all hogs and pigs on March 1, 2014, to be 62.9 million head, down 3% from a year ago, and down 5% from Dec. 1, 2013.

Market hog inventory is reported at 57 million head, down 4% from last year and down 5% from the previous quarter.

The pigs-per-litter number is notable, says Daniel Bluntzer, director of research for Frontier Risk Management. "The 5% reduction seems in line with the industry expectations. Working into this number, you have to go back to the September-November pig crop. That’s where, to me, it starts to unravel. To take these numbers at face value and force slaughter estimates out of these numbers is very difficult."

Taking all this into account, and what we know about the PEDv being tracked on a weekly basis with slaughter, "for my analysis, I’ve actually lowered that pigs-per-litter number down to about 4% to 4.5% to account for the virus and its spread, as opposed to USDA numbers of unchanged. I have lowered numbers for the December-February crop also, because we have seen no change in those reported cases."

While the numbers were lower, it was not as low as some pre-report estimates would have indicated. Analysts say it’s difficult to line up pig crops with actual slaughter reports.

Producers are still seeing margins of about $62/head, compared to a loss of $30/head a year ago, reports John Nalivka, president of Sterling Marketing. "On the one hand, we’re seeing this death loss of pigs, but there is expectation of profitability ahead in 2014. That came out on our sow farrowing intentions, which are up 2%. I think that is consistent with profitability expectations and what producer reactions would be."

"A subtle aspect that holds this together," Robb says, "is the sow utilization rate. That rate went up to 50%--the largest number since 2009. So clearly there are management things going on--to get sows rebred, holding sows longer, etc.—that producers are doing to manage the disease and its effects.

USDA made multiple downward revisions to past quarterly reports, starting with the 2013 September report. "More revisions [to the report] will cause the nature of the situation to get a handle of the disease situation," Robb says.

Expansion is soon to come, economists expect, but also revisions to the current and past Hogs and Pigs Reports will come as well. All three forecasted the price lows for the year will come in the fourth quarter of 2014.